Haydale Graphene's (LON:HAYD) composites division is to collaborate on an aerospace research project in a bid to produce a material less likely to be damaged in the event of an aircraft lightning strike.
The 18 month project is managed by the National Aerospace Technology Exploitation Programme (NATEP) and among the collaborators is Cobham.
The end users are Airbus UK and BAE Systems.
NATEP is providing a grant of up to £150,000 towards the £300,000 cost of the research project, of which Haydale will receive up to £100,000.
Welcoming Haydale to the programme, Bridget Day, of NATEP, said: "It is particularly pleasing to assist them with a practical application that uses the exciting properties of graphene in the aerospace industry.
We see this as having a high potential for jobs growth and exports. NATEP is a £40mln programme helping UK supply chain companies develop 100 novel technologies.
"It will also enhance UK supply chain capabilities and networks and enable them to deliver high added value to future aerospace products and services and increase their ability to win new business with higher tier companies anywhere in the world."
Ray Gibbs, Haydale's chief executive, said: "At the beginning of June we announced the appointment of Ebbi Shahidi and Quentin Fontana to develop our aerospace division within HCS and I am very pleased with this early, significant development.
"The support of NATEP is very welcome as it will accelerate our research in this area and enable us to collaborate with leading aerospace companies to develop new materials and structures at the forefront of emerging technology."
Currently, the carbon fibre reinforced materials used on aircraft are poor conductors of electricity, making them prone to damage from strikes, so copper or aluminium is added, which makes it heavier and more expensive.
Broker Cantor Fitzgerald repeated a 'buy' and target price of 200p (current price: 140p) following the news.
That is based on a discounted cash flow (DCF) model using a weighted average cost of capital (WACC) of 12% and 3% terminal growth.
"These parameters are not out of line provided Haydale continues both to achieve its key milestones and to deliver the strong news flow that is expected over the coming year, including first commercial orders," said Richard Hickinbotham.
Shares nudged 1.08% higher at 140p.